Business Succession Plans: Why They Are the Key to Protecting Your Future
Business owners are constantly planning for the future, but shockingly, that future doesn’t include a plan for when they are no longer running the business. In fact, a recent study found that 60% of all small business owners don’t have a succession plan.
Business owners may be years away from retirement or have no plans to step away from the business any time soon. But sometimes things happen, and it’s a smart idea to have a business succession plan in place to ensure the future of your family and your business for years after you no longer run the day-to-day.
Establish Your Vision
The key to any business succession plan is to have a clear idea of the business’ future of the business. This includes who you want to own the business after you retire or pass away, as well as what the business’ objectives and goals of the business should be and how you want it to be run.
This is the vision process of your business succession plan. In this step, you’ll be outlining your vision for the company’s future – and the future of your successors – by stating clear objectives and goals, and how you envision the company getting there. This isn’t about you creating a step-by-step guide on exactly how things should be run. This is you creating a blueprint for your successors to help guide them along the way.
Choose Your Successors
Once you have your vision in place, it’s time to choose your successors. This includes who will own the business, and will help run and manage it. This alleviates the potential stress and tension that may occur between people when they’re forced to deal with taking ownership of a business that has been passed to them.
By identifying not just ownership stakes, as well as active and non-active roles for family members and non-family members, you’ll make it easier for your successors to be successful. Your successors will ultimately make the decisions on how the business will be run, but this will serve as helpful guidance and support through the transition.
Set Up the Plan
There are many tax implications of passing a business from one person to another, and they differ based on the circumstances. A business succession plan preserves your business and helps minimize the tax implications for those who are taking over.
Have Everything in Order
There are many details to running a business, including account information, access and passwords. Make sure you’re handing over all the right keys to the right people. You want the succession to be smooth and helpful, not confusing and frustrating.
Create the Business Succession Plan That’s Right for You and Your Family
Creating a business succession plan isn’t the most enjoyable part of running a business, but it’s an essential aspect that can help protect you and your family’s interest and future for generations to come. Get help crafting the business succession plan that’s right for you by calling the Elissa I. Henry Law Firm at (512) 377-6696.
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